Hold on to Stocks?

For long-term investors who have no equity investments, this may be a good time to accumulate some. Equity markets may have taken a turn for the worse, but as fear takes control, some private bank strategists are maintaining their overweight calls on equities.

Strategists are telling investors to hang in there, and for those who have been undecided whether to invest in equities, this may be a good time to buy. Among promising themes, as the strategists see it, are infrastructure, banks and emerging markets.

Despite the pessimism on the US economy, long-term investors who can stay the course for three to five years are unlikely to rue their stock investments. Risk appetite indicators are showing that people are now extremely risks averse. They are at crisis levels, but investor mood tends not to stay at that level for very long.

Though a short rebound even for technical reasons may take place, the big question is, will things get worse before they get better, or is it close to the bottom? Investors who are tempted to enter the market aggressively are advised to enter the market with caution while long-term investors who have not invested in equities thus far, this may be a time to accumulate stocks. However in doing so, investors ought to diversify their portfolios. The virtues of diversification are heavily under-estimated. In most cases it is better to diversify than just sticking to a handful of stocks.

Strategist believes that the patient, long-term investor will find fantastic opportunities in the equity market now. Weathering these first three or six months of the year, and very often, equity markets will rebound in the middle of a recession.


"If you are going through hell, keep going." - Sir Winston Churchill